Any coins you use to fund the channel with and that you receive while the channel is still open will be "locked" to that channel. However you can still pay other people by routing payments through other open payment channels that people have with each other, hence it is called the Lightning Network.

You can have 0 coins and have the other person in the channel fund the channel. This means that they are paying you, and if you have to pay them, you can only do so after they have paid you.

There is a peer discovery mechanism described here: https://github.com/lightningnetwork/lightning-rfc/blob/master/07-routing-gossip.md

Peer selection is done by IP address and presumably uptime just like how Bitcoin peer selection is done. Physical location does not matter.

Fees are only used for HTLCs for routing payments. IIRC they are negotiated by the nodes participating in the routing of a payment and are set by the nodes themselves

Probably.

Thank you for the answers, you really are an expert in the matter and I find you always willing to help us noobs. I have publish the answer in the reddit forum they came from, maybe there are more visibility to he Lightning Network.

I have a personal question about the Lightning Network:
Could it be possible to set up a LN node and earn satoshis just putting some BTC available to others to create payment channels or these channels are just for those involved in the transactions (Bob and Alice)? Sorry if you have explained this in other post.

peace

I've been wondering about something related for a while now: as far as I understand LN, a payment can go through different payment channels to connect Bob and Alice. That means several people are involved. What if one person decides to close a channel, even though it will cost him money? Does that mean all connected channels also have to close?
If that's the case, can a malicious user join an existing payment channel with the sole purpose to close all connected channels? This spam would mean all participants in those channels have to pay a transaction fee again for an on-chain transaction to join another payment channel. Unless there's already something in place to prevent this from happening, an attacker could abuse this.

I think you misunderstood me: I know the payments are safe, but the channel has to close. If the users want to continue using it, they'll need to open another channel, making on-chain transactions with on-chain fees to do so.

^*Hashed Timelock Contracts (wiki)